Overview
In this part of the prospectus we have set out fund-specific information to help you compare the Funds and evaluate which ones are appropriate for your investment needs. The specific information for each Fund is divided into the following sections:
Fund Details
This section identifies the type of fund, the types and classes of securities of the Fund that are available, the date on which each class of each Fund was started and the Fund’s eligibility as an investment for Registered Plans.
What Does the Fund Invest In?
This section provides the investment objectives and strategies of each Fund. Each Fund will need the approval of its unitholders to change its fundamental investment objectives.
Except as described in the Annual Information Form, the Funds follow standard investment restrictions and practices established by the Canadian securities regulatory authorities.
Although the money you invest to buy units of any particular class is tracked on a class by class basis in each Fund's records, the assets of all classes of a Fund are combined into a single pool to create one portfolio for investment purposes.
What are the Risks of Investing in the Fund?
This section lists the specific risks associated with each Fund’s investment strategy. A detailed description of these risks is set out starting on page 2 under the heading “Investment Risks”.
To determine the risk level of investing in the Funds, the Manager uses what is known as the
“standard deviation” method that is widely accepted in the industry for measuring the total return volatility of an investment fund. Standard deviation helps capture both upside and downside risks associated with an investment in the Funds. It provides a reliable quantitative framework for assessing the Funds’ volatility.
Investment Objectives = a Fund’s goals, including the kinds of securities it invests in Investment Strategies = how a Fund’s portfolio manager attempts to achieve the objectives
The Fund’s volatility risk is measured using a rolling average standard deviation over periods of three to five years, which represent the typical minimum investor time horizon. Essentially, the greater the dispersion of the Funds’ performance (as calculated at several intervals during a given three or five year period) from its mean for that same period, the greater the Funds’
volatility. Note that if the historic performance of the Funds is less than three to five years, the Manager will then use a benchmark index that most closely resembles the investment mandate and strategies of the Funds.
As of the date of this document, the range of tolerances established by the Investment Funds Institute of Canada (“IFIC”) is as follows:
Low – for funds whose performance typically varies within a range of approximately 0 to 6 percentage points above or below their average return. Generally associated with money market funds and Canadian fixed income funds.
Low to medium – for funds whose performance typically varies within a range of approximately 6 to 11 percentage points above or below their average return. Generally associated with balanced and asset allocation funds.
Medium – for funds whose performance typically varies within a range of approximately 11 to 16 percentage points above or below their average return. Generally associated with large-cap equity funds investing in developed markets.
Medium to high – for funds whose performance typically varies within a range of approximately 16 to 20 percentage points above or below their average return. Generally associated with equity funds investing in small/mid-cap issuers, or in specific countries or larger sectors.
High – for funds whose performance typically varies by more than 20 percentage points above or below their average return. Generally associated with equity funds investing in emerging markets or narrower sectors where there is a considerable risk of loss.
In special circumstances, we may be of the opinion that a Fund’s level of risk based on IFIC criteria is not representative, in which case the classification may be revised at the Fund portfolio manager’s discretion in light of other factors, including the type of investments made by the Fund and their liquidity. In addition, assessing the risk rating of the Fund, we also consider the risk ratings of other mutual funds managed by our peers that have similar investment mandates and strategies and the historical volatility risk as measured by the standard deviation of fund performance.
The risk level of investing in the Funds is reviewed at least once a year and each time a material change is made to the Funds’ investment strategies and/or investment objective. A description of the method used by the Manager to determine the risk level of investing in the Funds may be obtained on request, free of charge, by calling 1-800-265-1888 (client services) or 1-877-685-5698 (Dealer Services) or by emailing us at [email protected].
Distribution Policy
As a unitholder, you are entitled to your share of a Fund’s net income and net realized capital gains on its investments. Each Fund passes substantially all of its earnings along to its unitholders as distributions. A Fund earns income in the form of dividends from stocks and interest from debt securities. A Fund realizes capital gains when it sells securities for a higher price than it paid.
This section tells you how often each Fund will make a distribution of income and capital gains.
Fund Expenses Indirectly Borne by Investors
This section helps you to compare the cumulative costs of investing in Class A, Class B, Class F and Class O Units of a Fund, as applicable, with the similar costs of investing in other mutual funds. For each Fund the table shows the amount of fees and expenses of the Fund which would apply to the applicable classes of units, over various time periods to each $1,000 investment you make, assuming:
the Fund’s annual performance is a constant 5% per year (which is the standard rate of performance to be used for exhibit purposes only); and
the Fund’s management expense ratio remained at the same level for the entire 10-year period as it was in its most recent financial year. For Class O Units it does not include the fee paid by you directly to us for our services.
Because the 5% performance rate and the constant management expense ratio are only assumptions for comparison purposes, your actual costs will be lower or higher.
For information about fees and expenses paid directly by the investor which are not included in the calculation of management expense ratio, please refer to the disclosure under the heading Fees and Expenses starting on page 19.